Taking What the Market Gives You

Filed under: Learn Forex Trading |


Screen shot 2013-02-27 at 10.30.45In The New Market Wizards by Jack D. Schwager, Linda Bradford Raschke, one of the world’s best traders, talks about the conundrum of taking profits. She states that:


“I’m also a firm believer in predicting price direction, but not magnitude. I don’t set price targets. I get out when the market action tells me it’s time to get out, rather than based on any consideration of how far the price has gone. You have to be willing to take what the market gives you. If it doesn’t give you very much, you can’t hesitate to get out with a small profit” (p. 300).


There is a lot of wisdom and lessons to be learned from this one, small paragraph – and many of the points that she makes really resonate with me. Steve Nison, the father of candlesticks in the West, also often talks about candlesticks not giving price targets, but only increase the possibility of a turn. Many traders (myself included) often make price targets based upon how much money they want to make on that particular trade. I usually place my targets at a logical level, before the next support/resistance level – and this works to an extent. However, Raschke goes a step further, and let’s price action tells her when to exit the market. This seems like a much more pragmatic approach, and it is something that I might well begin to utilise in my own trading. I like the idea of taking what the market gives you, and reading each candle as it unfolds – interpreting it along the way and making trading decisions. The only downside to this is that you would become more involved in the trades, and with involvement, there is a danger that emotion might take over.

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